Last week, as my colleague Peter Romeo reported, TGI Fridays announced plans to close 36 locations in the U.S., while selling another eight to its former CEO as a franchisee.
The closures continued a long decline for the venerable bar and grill chain. Fridays, which thrived during the mall era of the 1980s and 1990s, has closed restaurant after restaurant over the past decade. It now has fewer than half the locations it operated in 2012, according to data from Restaurant Business sister company Technomic.
It is not alone, at least.
Among the four major bar & grill chains, only one—the surprising Chili’s—is bigger than it was a decade ago. Applebee’s, once the largest casual dining chain in the U.S., finished 2022 with U.S. system sales 3.2% lower than it was a decade earlier.
Ruby Tuesday, which filed for bankruptcy in 2021, is 75% smaller than it was a decade ago.
Traditional bar & grill chains suffer from a variety of challenges that have been difficult to recover from.
First, consumers have shifted much of their business from full-service restaurants to limited-service restaurants, at least when it comes to chain restaurants.
The pandemic was supposed to teach those chains—and their consumers—how to use those brands for takeout. But for the most part, that’s not what those concepts were built for. They remain, fundamentally, dine-in brands that get much of their profits from the sale of alcohol.
Second, consumers aren’t going to do-everything brands. The U.S. restaurant business is demassifying, meaning that they are targeting more and more specific types of consumers.
Diners go out for something specific: Burgers, sushi, chicken fingers, chicken wings, etc. They do not want to go to one restaurant to get all this. When they want sushi, they go to a sushi restaurant.
Bar and grill chains have traditionally targeted broader groups. They’re not really burger chains, not really steak chains. That lack of specialization has hurt, in general. And it is why Chili’s has been able to outperform its rivals—the chain has been focusing on its strengths, notably fajitas and margaritas.
Third, it’s competitive. There are just so many of them out there. For years, this sector suffered from a “sea of sameness,” because consumers couldn’t necessarily tell the difference between Ruby Tuesday or Chili’s or Applebee’s. But there are so many independent bar and grill restaurants out there that it makes it difficult for these brands to compete.
And they lost much of their burger business to fast-casual and quick-service “better burger” concepts.
There are only so many customers to go around. And bar and grill chains like TGI Friday’s have been losing them.